The Mheda Journal

So the material handling industry is at it again. Another large company has been acquired. Over the last couple of years, the mergers and acquisitions bug has impacted all segments of the industry, be it forklifts (MCFA/Jungheinrich), conveyors (FKI Logistex/Intelligrated), storage & handling (Excel Storage Products/W.C. Cardinal), batteries (EnerSys/Douglas Battery) and more. And it hasn’t only been in manufacturing. Distributors including Riekes Equipment, Arnold Machinery, Alliance Material Handling, Briggs Equipment, MH Equipment and others have been in the pages of The MHEDA Journal for acquisitions in the not-too-distant past.

Then yesterday came word of the latest move, as Canada-based Camoplast Inc. announced its acquisition of the Solideal Group, worldwide manufacturer of industrial tires. Read the full press release here. As the press release states, “The Camoplast Solideal combination will create a world leader in industrial tires, rubber tracks and undercarriages with a strong presence in construction tires and wheels.” As always, time will tell how this shifts the balance of competitive power in the industrial tire market, but it’s clear that this creates a large player.

What do you think? How will this acquisition impact MHEDA members and the material handling industry?

In my last post, I mentioned how mergers and acquisitions are impacting the material handling industry. Today I talked to another distributor who has been involved a large industry merger, Bob Schermer, COO of Equipment Depot (Houston, TX). As part of Pon North America, Equipment Depot is in the process of merging five companies (the former Portman Equipment, Levee Lift, Forklifts Inc., Material Handling Services and Equipment Depot Texas) under one corporate brand. I asked Bob how the company is combining the cultures. His response, I thought, was a good one:

“It is an evolutionary process that cannot be forced.  Best practices are shared, common operating systems and shared services are put into place.  We realize that their success has been built around their structure and culture.  To force immediate change can alienate the people and destroy the earning power of the acquired company. 

“We purchase a company to strengthen our position in the market, increasing our size which gives us the economy of scale to do bigger and better things in the area of employee opportunities, marketing, buying power and one voice to the OEM.  All of these are things the ‘acquired’ employee wants to hear and will get excited about.

“We walk into these situations with the feeling that the acquired company likely has some great practices that we can implement into our company.  This is why we focus on well-run, profitable businesses; they are typically good in many facets of their business.  We want to learn from them and put into place, what they do better than us.”

I think that’s a good point. Some people may think that the company who does the acquiring just comes in and cleans house, sets up shop and imposes their will on the acquired shop with a you-will-do-things-this-way-and-you-will-like-it attitude. (Many companies, in fact, do this; that’s why many acquisitions fail.) That’s why Bob’s answer was refreshing. It sounds like the early stages of their merger process are rooted in good intentions. With proper communication and continued open attitudes, long-term success should follow.

Thanks for your time, Bob, and good luck with the merger going forward. The Fourth Quarter issue of The MHEDA Journal will analyze the merger and acquisition process from the perspective of a couple of different members. In the meantime, if anyone has any comments, I’d love t hear them!

It seems like there has been a lot of merger & acquisition activity over the last 12-18 months in the material handling industry. A down economy often spurs such activity, as more struggling companies are ripe acquisition targets. So that part isn’t a surprise.

In the next issue of The MHEDA Journal, we will analyze a couple of recent industry acquisitions from both a manufacturer’s and distributor’s perspective. Among the questions we will answer is, How can you merge differing company cultures following an acquisition?

A distributor who I spoke to yesterday had an interesting take on that question. I’m withholding his name for now because he asked me to, but that doesn’t diminish the quality of his response. He said, in part, “You need to find an existing culture that has some fundamental similarities so broad imposition is not required.  Secondly, make the obvious changes in operations, expense and staffing immediately but do not change just to change.  Allow everyone to become acquainted developing relationships and trust in the future.  Utilize people from all your company departments to work with their counterparts and encourage everyone to ask questions concerning anything. Finally, allow things to settle for a bit after initial change. The single biggest piece of advice is that nothing is as easy as it looks and it will take time to raise performance to match your goals.  Given that make sure you are adequately capitalized to give yourself the time it will take.  It also takes a lot of mental and physical energy and be prepared for the drag on you and your staff.”

I’m certainly no expert on the topic, so I’d love to hear any feedback you have about how to blend cultures following a merger. One of my loyal readers, Josh Smith of AK Material Handling, proposed this question: “Regarding the recent and future acquisitions of manufacturers, how do you think they will impact on the relationships that manufacturers have with distributors?” So, what do you think?